AA increases rates on savings accounts

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AA has announced it is to pass on the Bank of Englands base rate increase to its customers through an increase of the interest rate on its savings accounts.

Interest rates on instant access savings accounts from AA are now set to rise by 0.25 per cent for new and existing customers, with effect from February 1st 2007.

The company noted that this means its rates now stand at 5.6 per cent for its Phone and Save package and 5.37 per cent for its internet account.

Lloyd East, director of AA Savings, said: "The latest increase was not expected and caught many commentators off guard.

"But we are committed to providing consistently well-performing savings accounts."

Both accounts are instant-access with no penalties incurred regardless of the number of deposits and withdrawals made, AA stressed.

Consumers wishing to open a new account may do so with an initial deposit of £1 for either the internet or phone format.

Recent research conducted by AA Savings found that 46 per cent of savers would not switch accounts to gain a better interest rate.

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